Mattel Shares Soar as Profits Shatter Expectations

Mattel Inc. (MAT) said on Monday fourth-quarter earnings rose 33 percent, led by higher sales of its Fisher-Price toys, a one-time tax benefit and a resurgence of its Barbie dolls.

Its shares jumped 10.5 percent to a 14-month high of $20.28 in early trading on the New York Stock Exchange, their biggest one-day gain in at least two years.

"It's all about the outlook for Barbie," said Harris Nesbitt analyst Sean McGowan. "It would be a pretty good bet that Barbie will be up every quarter in 2005."

U.S. Barbie sales rose 3 percent, compared with a 25 percent plunge in the year-earlier quarter. The last time quarterly U.S. Barbie sales were positive was the third quarter 2000, McGowan said.

The No. 1 toy maker, whose brands also include American Girl dolls (search) and Rescue Heroes (search) figures, said net income was $284.3 million, or 68 cents per share, up from $213.9 million, or 49 cents per share, a year earlier. Net sales rose 6 percent to $1.85 billion.

Results for the most recent quarter included a $65 million one-time tax benefit on a settlement with the Internal Revenue Service (search).

Before the tax gain, Mattel posted a fourth-quarter profit of 52 cents per share.

According to Reuters Estimates, analysts had forecast, on average, fourth-quarter earnings per share of 48 cents and revenue of $1.76 billion.

"Sales were up in most segments, up strongly in the U.S. Domestic sales were up 10 percent, and ... no one has been reporting positive surprises in the toy business," McGowan said in a research note.

On a conference call with analysts, Mattel Chief Executive Bob Eckert said the company was going to raise prices globally "across the board" in a range of about 2 percent to 4 percent, in response to higher raw material and labor costs.

Mattel said U.S. gross sales were up 10 percent. International sales rose 3 percent, including a benefit of 5 percentage points from the impact of the weak dollar, which increases the value of overseas sales when they are converted into dollars.

The year-earlier sales include a benefit of 2 percentage points from the weak dollar.

For the year, Eckert said sales were "sluggish" in Europe, with retailers reluctant to buy heavily following a "tepid" Christmas of 2003. He said European sales for this past Christmas were also "lackluster."

Worldwide sales of Barbie products fell 1 percent. Fourth-quarter worldwide gross sales for Fisher-Price Brands, which includes Little People and Rescue Heroes, were $658.5 million, were up 10 percent. Sales of American Girl brands rose 7 percent.

Sales for its entertainment business division, which includes games and puzzles, were up 30 percent for the quarter.